Veritas to Unload 23 Apartment Buildings in San Francisco

Veritas, the landlord that lost 95 apartment buildings in San Francisco after defaulting on $1 billion in loans, has put 23 more multifamily properties across the city up for sale.

The locally owned investor led by Yat Pang-Au has listed buildings containing 762 rent-controlled apartments in Alamo Square, Russian Hill, Mission, Nob Hill, Tenderloin, Noe Valley and in Lower Haight, the San Francisco Chronicle reported, citing a brochure.

The asking price for the portfolio dubbed the “San Francisco Neighborhood Collection” was not disclosed.

“Located across many of San Francisco’s more desirable and very difficult to access neighborhoods, the Neighborhood Collection presents a compelling opportunity to acquire a portfolio of high-quality SF rental housing that would be virtually impossible to replicate via one-off acquisitions,” reads the brochure by Eastdil Secured, the brokerage hired to facilitate the sale.

Veritas, through an unidentified spokesperson, declined to comment on the listing.

The portfolio of apartments is the third batch of apartments that Veritas, once the largest landlord in San Francisco, has shed over the past year.

But while Veritas has endured domino sell-offs in San Francisco, the firm has bought apartment buildings around Seattle, according to the Puget Sound Business Journal, including two complexes last week for $18 million.

The $18 million purchase netted a 33-unit, 116-year-old complex and a newer 25-unit property next door, $5 million less than what the pair sold for five years ago. In December, Veritas paid $5.2 million for a 16-unit complex in Seattle and $16.1 million for a 44-unit property in Bellevue.

In all, Veritas paid $39.3 million for the four apartment buildings. The prices average out to $333,000 per unit.

The Pacific Northwest pivot came after the locally based Prado Group took control of 20 San Francisco apartment buildings from Veritas in late November after buying $124 million in troubled mortgages tied to the 316-unit portfolio. Terms of the purchase were not disclosed.

Last month, Brookfield Properties and Ballast Investments bought $915 million in Veritas loans, allowing them to foreclose on 76 apartment buildings with 2,165 units across the city.

The unit of the Toronto-based Brookfield and the locally based investment firm bought the two Veritas loans for $615 million, allowing them to buy the portfolio through foreclosure for $284,065 per unit, a major discount compared to their value before the pandemic.

The debt sales resulted in the loss of 2,481 apartments in San Francisco. The new listing of nearly 800 apartments, if sold, would mean Veritas would reduce its local footprint by 3,243 units.

In 2022, Veritas affiliates owned around 6,500 apartments across 293 buildings in the city, valued at $3 billion, according to the Chronicle.

Advocates of affordable housing smell blood. Tenant advocate Brad Hirn said the moment means a chance for San Francisco to “stop the cycle of speculation” by acquiring some of the properties as permanent affordable housing.

Last month, Board of Supervisors President Aaron Peskin announced legislation that would amend the city’s Community Opportunity to Purchase Act, a law passed in 2019 that gives nonprofits the right to make a first offer on listed apartment buildings.

The amendment would expand the COPA notifying requirements to include a “deed in lieu of foreclosure” that allows landlords to voluntarily surrender ownership of properties to their lenders in order to avoid a lengthy judicial foreclosure.

“If there are opportunities for the city to partner with affordable housing developers on small site acquisitions, opportunities to preserve affordable housing and keep people in their homes — these are the types of investments that the city should be planning for now,” Peskin told the Chronicle.

— Dana Bartholomew